The financial statements for Jode Inc. and Lakely Corp., just prior to their combination, for the year ending December 31, 2017, follow. Lakely's buildings were undervalued on its financial records by $60,000. Jode Inc. Lakely Corp. Revenues$1,300,000 $500,000 ?Expenses (1,180,000) (290,000)?Net income$120,000 $210,000 ?Retained earnings, January 1, 2017$700,000 $500,000 ?Net income (from above) 120,000 210,000 ?Dividends declared (110,000) (110,000)?Retained earnings, December 31, 2017$710,000 $600,000 ?Cash$160,000 $120,000 ?Receivables and inventory 240,000 240,000 ?Buildings (net) 700,000 350,000 ?Equipment (net) 700,000 600,000 ?Total
assets$1,800,000 $1,310,000 ?Liabilities$250,000 $195,000 ?Common stock 750,000 430,000 ?Additional paid-in capital 90,000 85,000 ?Retained earnings, 12/31/17 710,000 600,000 ?Total liabilities and stockholders' equity$1,800,000 $1,310,000 ???On December 31, 2017, Jode issued 54,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Lakely. Jode's shares had a fair value on that date of $35 per share. Jode paid $34,000 to an investment bank for assisting in the arrangements. Jode also paid $24,000 in stock issuance costs to effect the acquisition of Lakely. Lakely will retain its incorporation.Required: Determine consolidated net income for the year ended December 31, 2017.
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| Consolidated Net Income | |||
| Jode's Revenues | $ | 1,300,000 | |
| Jode's Expenses | (1,214,000 | ) | |
| Consolidated net income | $ | 86,000 | |
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| Note: The subsidiary's revenues and expenses prior to the date of acquisition are not consolidated. | |||
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